3 financial questions to ask before moving a parent into memory care

Tips when planning for the financial future of loved ones who are living with dementia or Alzheimer’s

.(Photo: Memory care households are a great option for residents with Alzheimer’s, dementia and other memory problems – but it’s important to plan before making a move. (Photo: Courtesy Episcopal Retirement Services))

When arranging long-term care for an aging loved one, there are numerous considerations to weigh, from health care options to new living arrangements. Adult children with parents who are living with Alzheimer’s disease, dementia or other cognitive loss have probably explored memory care – households that are equipped to address the specific needs of people with cognitive loss. If you decide memory care might be the best route for your family, it’s important to ask some key financial planning questions to prepare for any scenario.

What do I need to know about buying or selling existing property?

Before moving a family member into memory care, adult children often wonder whether their parents must sell any properties they own, including primary residences, vacation homes or investment properties. Unfortunately, there is no simple answer. It depends on how your family member will fund long-term care, whether the property is a primary residence and whether anyone else is still living in the home.

If your parent’s care is being funded through a 401(k), IRA or another private retirement asset, then it isn’t necessary to sell any property, unless it can be liquidated to pay for unforeseen expenses. If changes in Medicare or Medicaid have allowed your family members to subsidize any part of their care, the Centers for Medicare and Medicaid Services (CMS) will attempt to recoup expenses paid for care from your family’s estate. Before Medicare or Medicaid payments may be made, the recipient must liquidate and spend down disposable assets.

.(Photo: If Medicare or Medicaid subsidies require liquidating your family member’s assets, it’s important to know what is considered “disposable.” (Photo: Courtesy Episcopal Retirement Services))

CMS in most states consider anything other than the recipient's primary residence and certain cash limits to be subject to spend-down. This includes IRAs, 401(k)s, pension funds, bonds, vehicles, investment properties and second homes.

In Ohio, a recipient's primary home is not typically counted as a disposable asset. If a recipient is placed into nursing care or is away from the residence for two or more years without the expectation of returning, however, the state may file a lien and begin liquidation procedures for the home.

Can I transfer my assets to my spouse or to relatives?

Not generally. It can be tricky and even illegal in certain scenarios. You usually cannot give or transfer a title to adult, able-bodied children, other relatives, and friends or to most trust funds, without incurring an ineligibility penalty (meaning you are not eligible to receive Medicare or Medicaid benefits for a certain amount of time — this is also known as being placed on "sanction").

In the case of a married couple in which one partner is entering an assisted living arrangement and the other is still living independently, the house is protected if it is the independent spouse's primary residence. Any jointly held assets, however, are subject to spend-down to the limit the state defines on the Medicaid recipient's portion of ownership.

How do I figure out the best financial retirement plan to fit my needs?

The best course of action is to start planning early with help from a legal expert and/or certified financial planner who specializes in elder care law and knows the ins and outs of your state's Medicare and Medicaid regulations. Then, be flexible enough in your planning to adjust, as circumstances require.

A lawyer can help your family create a living will, which designates roles like medical powers of attorney; sets advance directives and outlines wishes about property and other assets. Time is an important factor when your loved one has memory problems, so it’s prudent to make these decisions as early as possible.

If you are already thinking about memory care options for a family member, now is the time for aging parents and adult children to have conversations about expectations for the future. With the proper planning, you can make your transition to a retirement community as seamless as possible.

Episcopal Retirement Services works to improve the lives of older adults through innovative, quality senior living communities, and through in-home and community-based services. Its premier communities include the Marjorie P. Lee Retirement Community and Deupree House, located in the neighborhood of Hyde Park in Cincinnati.

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